Seeking to improve understanding, communication, and cooperation between Mexico and the United States by promoting original research, encouraging public discussion, and proposing policy options for enhancing the bilateral relationship.

Tag: Petrobras

Oil and gas production in America has soared thanks to shale deposits, some of which extend into Mexico but which Pemex has failed to develop. Pemex also looks south with envy at the deep-water prowess of Brazil’s Petrobras, another state-controlled but more entrepreneurial firm.

Mexico’s government says it will shortly unveil big energy reforms. These may include changing the constitution to relax Pemex’s monopoly on oil production. As an indication of how politically sensitive this will be, the presidency let speculation grow that the reform would be announced on August 7th, only to admit the day before that it was not ready. Not only is it unclear how far the reforms will go, such is the state of Pemex that some doubt it is reformable at all.

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Each day we will bring you an assortment of op-ed pieces from major Mexican dailies.

Reforma

Jorge G. Castañeda

A few days ago, Chile hosted CELAC’s (Community of Latin American and Caribbean States) first meeting. The organization’s purpose is simple: to build a regional structure that includes Cuba and excludes the United States and Canada. Speaking as CELAC’s president pro tempore, Cuba’s Raúl Castro said he would fight drugs “by fire and sword,” and suggested Cuba’s death penalty has led to a drug-free Cuba. The Cuban dictatorship has indeed used “fire and sword” to fight drugs, but has also employed them to crack down on imaginary evils, like homosexuality and political opposition. Latin American democracies have already been down the “fire and sword” road, only to discover that it leads to death, violence, repression, and, contrary to Mr. Castro’s beliefs, the persistence of drug-related problems.

There’s at least a reasonable probability that you’ve spent time basking on the beaches of Cancun, Acapulco, Cabo San Lucas, or one of Mexico’s other glorious getaways. Nevertheless, despite the country’s proximity to the U.S., I’m willing to wager that, even if you’re a longtime energy aficionado, you’re less familiar with its oil and gas scene than you may be with those of some more distant Latin American locations, such as Brazil or Venezuela.

Mexico clearly has vast reserves of oil and gas. Indeed, its northern shale fields just might contain reserves amounting to nearly 700 million cubic feet of gas, making the country potentially the world’s fourth-largest supplier of hydrocarbon, behind only China, the U.S., and Argentina. As for crude oil, the country’s production has been sliding steadily, from an average output of 3.3 million barrels per day (bpd) in 2006 to 2.54 million bpd in 2011. However, our neighbor to the south is outranked only by the country to our north as a supplier of crude to the U.S.

Reforms at Mexico’s state oil monopoly Pemex have started to open the company up to more private investment, and Pena Nieto has pointed to the success of state-controlled Petrobras – which trades on several major stock exchanges and has boosted efficiency – as a model for deeper change.

Mexican Energy Minister Georgina Kessel said the government may seek to emulate Brazilian state-controlled oil company Petroleo Brasileiro SA as the country considers “all” potential changes to its oil industry.

Mexico must decide what steps taken by the Rio de Janeiro-based company it can adopt, Kessel, who’s also chairwoman of state-owned Petroleos Mexicanos, said yesterday in a telephone interview from Monterrey, Mexico. She’ll meet Mexican lawmakers “soon” to discuss potential changes to the law, she said.

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Thirty years ago, a fisherman saw an oil slick in the shallow waters off the coast of Mexico. The discovery would lead to one of the largest crude reservoirs in the world and a party keg for an impoverished country.

“We cannot stay dependent on one single reservoir anymore, even if it’s very good. That is something that we have to keep in mind every day that we wake up.”

Production at Cantarell, as it was named after the fisherman, peaked at more than 2 million barrels of oil a day in 2004 and then began to fall sharply. It is expected to bottom out in three or four years, perhaps between 300,000 and 600,000 barrels a day.